Brazil stocks, real slump on bailout vote jitters

Wed Oct 1, 2008 10:59am EDT
SAO PAULO, Oct 1 (Reuters) - Brazil's stock market and currency fell early on Wednesday, mirroring losses on Wall Street as jittery investors awaited a U.S. Senate vote on a revamped plan to rescue the crisis-hit financial industry.
The Bovespa index .BVSP of the Sao Paulo Stock Exchange was down 3.11 percent at 47,998.85 points, a day after surging 7.63 percent on hopes that leaders in Washington would eventually agree on a $700 billion bailout plan for banks.
The Brazilian real BRBY fell in tandem with the stock market, weakening 1.7 percent to 1.939 per dollar. On Tuesday, the real rallied 3 percent, rebounding from a 5.7 percent plunge that pushed it to a one-year low.
The U.S. Senate is slated to vote later on Wednesday on a revised version of the bailout plan, which is aimed at halting the worst financial crisis since the Great Depression. The vote follows a stunning defeat for the bill in the U.S. House of Representatives that sent global markets reeling on Monday.
"All eyes are on the U.S. Senate vote," said Marcelo Voss, chief economist at Liquidez brokerage in Sao Paulo. "It's generating uncertainty."
With investors already on edge about the fate of the rescue package, a report showed that the U.S. manufacturing sector contracted further in September, heightening concerns about the health of the economy and the outlook for corporate profits.
Interest-rate futures <0#dij:> on the BM&F commodities and futures exchange crept lower across the board, reflecting the view that falling commodities prices may put the brakes on inflation. Lower inflation would take pressure off Brazil's central bank to keep raising interest rates.
At the stock exchange, state-run energy company Petrobras (PETR4.SA: Quote, Profile, Research, Stock Buzz) led the Bovespa index lower. The stock, the heaviest weighted in the index, was down 4.1 percent at 33.66 reais as world oil prices fell below $100 a barrel.
Mining giant Vale (VALE5.SA: Quote, Profile, Research, Stock Buzz), the second heaviest weighted stock in the index, slumped 4.74 percent to 31.16 reais as prices for copper and industrial metals came under pressure as the U.S. dollar rallied against a global basket of currencies.
Banking shares also tumbled as concerns mounted about the fate of the financial industry in the United States. Banco Bradesco (BBDC4.SA: Quote, Profile, Research, Stock Buzz), Brazil's biggest private-sector bank, fell 4.33 percent to 29.6 reais and Banco Itau (ITAU4.SA: Quote, Profile, Research, Stock Buzz) dropped 4.08 percent to 30.58 reais. (Reporting by Todd Benson and Jenifer Correa)